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MANILA, Philippines – Senators on Friday, May 25, urged the government to suspend the imposition of excise taxes on fuel amid skyrocketing prices.

Senator Grace Poe, chairperson of the Senate committee on public services, said this was the initial recommendation of the panel after holding its first hearing on the effects of the tax reform law on utilities and transportation in Iloilo City on Friday, May 25.

Since the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) law this year, the average price increase on fuel has been P8.07 per liter for gasoline, P8.95 for diesel and P9.15 per liter of kerosene.

(We will ask the Department of Finance and other agencies to carefully study the suspension of excise taxes on fuel because of the endless price increase of petroleum products.)

During the hearing, senators were told that pump prices in Panay island had already increased by 30% or at least P10 for diesel and gasoline since December last year.

Consumer groups in Panay told the Senate panel that the TRAIN law, along with increasing fuel costs, caused an uptick in commodity prices.

They cited increased prices of rice (by P5 per kilo), pork (P15 per kilo) and fish (P20 per kilo) in the region.

Senators were also told that farmers had to fork an additional P2,600 a month, while a worker has to contend with an additional P3,640 monthly following the implementation of the tax reform law.

Senator Paolo Benigno "Bam" Aquino IV, who filed the resolution for a Senate probe into the inflationary impact of the TRAIN law, reiterated his call for the government to suspend excise taxes on fuel.

Aquino made the statement on Friday, after the Department of Energy (DOE) said that the TRAIN law has a provision for immediate suspension of excise taxes on petroleum products if prices become too high, this would only cover the additional excise tax due for 2019.

Senate President Pro Tempore Ralph Recto also took note of this provision. Recto said that accordinf to finance officials, the Department of Finance must first issue separate Implementing Rules and Regulations (IRR) for the suspension to take effect.

BIR Revenue Regulations No. 2-2018, TRAIN law's IRR on petroleum products, stated that “for the period covering 2018 to 2020, the scheduled increase in the excise tax on fuel as imposed in this section shall be suspended when the average Dubai crude oil based on Mean of Platts Singapore (MOPS) for three (3) months prior to the scheduled increase of the month reaches or exceeds eighty dollars (USD80) per barrel.”

Recto also emphasized the weak peso against the US dollar and soaring prices of oil “form a volatile mix.”

(The strength of the peso must also be considered and not just fuel prices. For example, even if oil prices costs just $50, but say the peso would hit P80 to the dollar, gasoline prices would still jack up.)

Socioeconomic Planning Secretary Ernesto Pernia admitted that the price increases are alarming because “it’s quite abrupt,” but said that there are safeguards in place.

“There are already provisions like the pantawid pasada (subsidy for drivers) and also the unconditional cash transfer program. They just have to be speedily dispersed,” Pernia said.

However, he noted that the public has been used to lower inflation in recent years.

“We need to look at inflation in perspective. We used to hit double digits then, and now it’s much lower. We are just a bit more sensitive now,” Pernia said.

“Inflation is a complex matter that is beyond our control, dictated by world prices,” he added.— Rappler.com

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Welcome to Rappler, a social news network where stories inspire community engagement and digitally fuelled actions for social change. Rappler comes from the root words "rap" (to discuss) + "ripple" (to make waves).